Would like to get rid of my Property Manager (lease, tenant, rental)

[rainingblue]

Been using him for a few years, with no troubles in the home. Suddenly this year I had major problems at my rental and realized how useless he is. I live out of state and have done most of the legwork still (ie looking for repair people, getting quotes etc. as he keeps telling me he doesn't know anyone, or gets me quotes 3x higher than what I find). Recently my tenants called one of the repair person themselves! And when I asked the property manager what was going on, he said he didn't know and I felt like I had to push him to go there and find out.

I looked at my contract with him and looks like if I release him of his duties, I need to give him 30 days notice.

However what I am confused about is what happens to the tenants. Their lease is actually coming to an end in a couple of months and I am unsure if they will be renewing. If they do not, I figured I better get rid of the Prop. Manager after the tenants leave. If they stay, what happens to all the tenant's deposit the Prop. Manager is currently holding. Also do I make a whole new lease with them?

I most likely will not be hiring a new prop manager, since my cousin says he will help me take care of it.

Any advice greatly appreciated!

[ShaneSA]

I would give the property manager 30 days notice now. Put it in writing and send a copy to the tenants. Send a seperate letter to the tenant letting them know who the new property manager is and how to contact him. That way, your tenants will have the knowledge that you are concerned and have made arrangements to take care of them. It may give them the incentive to stay if management is a concern for them.
The property manager has to transfer the deposit over to your cousin. Your cousin will need to sign a transfer that he has received the deposit.
The lease remains the same unless you are changing other clauses in the lease. You can make a new lease when the old one is up or let it continue as provisions in it probably address continuation.

[bentlebee]

You need to give written notice and put the sec. dp. in a seperate account and from then on your on your own. Perhpas your property manager is not doing a good job but we get better estimates than most owners can get since we use the same people more often. we always let 3 companies give us estimates to make sure we get the cheapest price. Some think they can go higher in price after a while but then they will learn we don't ask them anymore.

Careful with a family member. I just took over almost 2 dozen properties from an owner who's family member helped him for years until he found out that the family member had put in almost all money from repairs in his own pocket...non ref. pet fees in his own pocket and also the sec. dep. were gone...so much for being family. Of course in the beginning it was all fine...

Btw tenants call in the evening and in the weekend since it seems they like it better to call after hours since they have free time....be prepared for it or your family member.

Good Luck

[KonaKat]

If I were you, I would call 2 or 3 other management companies in the area and talk to them about your property. Then, talk to your cousin and line out EXACTLY what you expect and tell him that you will be sending him a contract to sign agreeing to these duties. See what the other companies offer, and what your cousin says to a true business arrangement. I agree with Bentlebee - it's very likely to end badly.

[rainingblue]

thank you for all the advice. i was wondering what i need to do about the security deposit... as long as i open up a separate bank account, then it is good? my coworker told me i may need a trust fund? can his rent payment also go into the same account that holds the security deposit?

the current lease has the property manager's co. name and terms on there though. can i still leave that lease as is? I actually have never seen the lease either, so am unsure what it says on there. but i was just counting the time, and realize if i give the prop manager his 30-day notice soon, there will only be about 2 weeks before the tenant's lease is up. so i will have to write a new one with them anyways (assuming they stay).

my only slight worry about it being so close to lease renewal is what if the tenants decide not to renew their lease and move out.... they haven't kept the house in the best condition (ie kids drew on the wall, bathrooms are pretty filthy). and say the property manager has his 30 day notice and now no longer has my best interest. can he just say house looks good, give the tenants all their deposit back and screw me over?

this prop. manager has just truly disappointed me though. i've actually used him for 4 years now... but like i said earlier, i've really never had any issues with the house except for this year. all the other times, he just pretty much collects rent for me. i guess this was the real test. i dont think my expectations are too high. all i asked was for him to get me 3 quotes... and he couldn't come up with that. he finally came around with 1, that he claimed would be the cheapest, but yet had no one to compare it to. finally i found quotes, referred to by the manufacturer, and it was 3x less. then i had another job that needed to be done.... and same scenario. he said he didnt know anyone, then found someone, and got me a huge quote again. and he never goes by to check to make sure these guys are doing a good job in repairs. i dont expect him to be there all day.... but at least at the end when they are done, just to look and make sure things were done correctly. the topper was when the tenants called a plumber themselves, and when i asked the prop. manager what the problem was, he said he wasn't sure? so i am a little confused on his purpose at this point, if the tenants are now calling repair people themselves.

can i give him notice in email. or does it have to be on paper?

[KonaKat]

1. no you can't put the rent in the same account as the deposit. A trust account is used for the deposit; an operating account is used for paying bills etc.
2. no you cannot, repeat cannot, keep using the same lease with the old manager's name on it. You must create your own lease.
3. Does this individual, your manager, have a boss? A broker? Have you talked to them? Are these people licensed realtors? (not sure of your state's laws)
4. No you need to send him a formal letter. In my opinion an e-mail is not sufficient although you can also send an email.

No offense intended sir, but I think you're in for a world of hurt if you try to manage this house yourself with your cousin's help. You obviously have no idea of the law as it applies to you, or the most basic issues of being a landlord. Take our advice and simply hire a new property manager.

[lawmom]

Agreed -- interview more prop managers and get references, perhaps, but it seems pretty clear that it will not go well if you go it alone with your cousin.

[DowntownVentura]

Originally Posted by KonaKat

1. no you can't put the rent in the same account as the deposit. A trust account is used for the deposit; an operating account is used for paying bills etc.
2. no you cannot, repeat cannot, keep using the same lease with the old manager's name on it. You must create your own lease.
3. Does this individual, your manager, have a boss? A broker? Have you talked to them? Are these people licensed realtors? (not sure of your state's laws)
4. No you need to send him a formal letter. In my opinion an e-mail is not sufficient although you can also send an email.

No offense intended sir, but I think you're in for a world of hurt if you try to manage this house yourself with your cousin's help. You obviously have no idea of the law as it applies to you, or the most basic issues of being a landlord. Take our advice and simply hire a new property manager.

Spot on with his post. tenant law is complicated these days and until you are up to speed, use a pro.

Regarding item 1, this is dependent on the state. In California it is not necessary to setup a separate account for the deposit. But, rainingblue, the account should be setup in your name, not the property manager, not the cousin. You need to control this. Even though it isn't required here, as KonaKat says, I setup two accounts for each property, a savings account that holds the deposit and a checking account that is the operating account. All expenses come out of the operating account. Both these accounts are in my name only. If you have an LLC, they would be in the LLC's name.

Aside from the PM keeping you in compliance with rental law, another big advantage they have is they typically have their contractor list. Tradesmen they have used before and, most importantly, will want to keep a good relationship with the PM. When you try to get your own contractor, your job will be a lower priority and if you aren't satisfied, you may have a struggle getting it resolved. The PM has clout. I realize this is not what happened with your current PM but it is a big thing they provide and you should switch to a PM that does.

[bentlebee]

No you can't use the lease the property management is using. You can't put sec. dep. in the same account as other money and you need to give proper notice to the tenant where the sec. dep. will be held....

We always tell owners, if you know what you are doing you can do it yourself but you have to remember that tenant complain easier to owners than to a property management and a property management can easier tell a tenant what will be done and what not since we don't have any emotional involvement with the property or the tenant but handle it as a business, but we are human.

Today we had to deal with a tenant who just got served with the writ of possession and now wants to talk to the owner....of course we didn't give the owners phone # or email and we handled it with the owner in a seperate way and this makes it easier to the owner.

If the property manager from the OP is not doing enough than the OP should change property management or handle the property himself.

The internet can be of a great information but keep in mind that you have to do everything by following the law otherwise you can end on the wrong side and get a judgement in court if you run into a smart and clever tenant.

[Touchette]

1. As Downtown said, it depends on the state whether or not you can co-mingle security deposits with other funds, along with how much interest you need to pay upon the deposits return, if any. You'll have to check your state/local laws for what you can/can't do in regards to the deposit.

2. You may be able to use the same lease, but you will need to have the management company assign it to you, and you'll want to get the Tenant to sign an Attornment Agreement. You may be able to get the Tenant to agree to some changes to the Lease in the Attornment Agreement, though then it would actually become an amendment. That said, the lease needs to be assignable. Additionally, you screwed up as a Landlord by not getting a copy of the Lease and by not having your name on it. I work for a management company and all of our leases list the Landlord/Lessor as "(Owner's Name) c/o ROCK SOLID Management". The "c/o" stands for "care of", meaning the management company is representing the Owner in this respect. All of our leases also state that the Owner has hired us to manage the property. If you want to do it a different way, make sure you management agreement properly defines how contracts are to be dealt with in the event of termination or the management agreement.

3. As Konat said, go to the top if you can.

4. If the management company gives the Tenants their deposit back when they weren't supposed to, then I would speak with an attorney and potentially take them to small claims court.

5. Notice needs to be made by whatever means the management agreement dictates. Usually, though, a formal letter sent via certified mail (w/ return receipt) will be your best option.

6. I'd also avoid the family tie in unless he's a licensed agent. This is for two reasons, 1) the law may require that any non-owner managers be agents, and 2) this is a tricky industry where things can go bad fast and I'd hate for a rift to come between family over business. Regardless, make sure you get and review a good, complete management agreement with your attorney.